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Capitalism Made Your iPhone

I've seen a lot of strange noise rising up on Facebook lately. It appears that some people think capitalism makes things, and that other people seem to think that capitalism is just getting in the way. Obviously neither case is true. This is an econ blog after all!

An example of the former problem is the quote inside the screencap below with the sentence 'capitalism made your iPhone' and a rebuttal to the effect that different economic systems sumply determine who gets paid for creating stuff. The rebuttal is true as far as it goes, so I won't address it here.

If we take the sentence 'capitalism made your iPhone' completely at face value then it's a false statement. Workers apply labour and capital to make and distribute iPhones. But nobody disputes that. At least no economist or businessperson disputes that, as economists and businesspeople are workers themselves.

Bear in mind what capitalism is and is not. It's just a mode of production. The difference between capitalist production and non-capitalist production is that capitalist production is necessarily entrepreneurial and reliant upon outside finance to initiate the production - of whatever - in question.

The cycles of capitalist production will over time drive prices down, eventually making it an affordable prospect for a business to make and sell consumer smartphones and tablets, and for competition between the different tribes of capitalists (Samsung and Apple don't get on very well) to continually improve the lifespans, feature sets and reliability of the devices.

Contrast this with the dearth of new consumer-focused products in those parts of the world which have not seen any sustained use of capitalist production yet and the conditions in which people live in those societies.

Of course there's also the matter of the contrast between the availability of goods and services sans capitalism versus the availability of goods and services with capitalism. This is made very clear by quick perusal of a GDP hockey-stick graph.

Daniel J. Mitchell is a bit of a dick but on the broad brush strokes of economic theory and history he is a sound source to go to. Hopisen has some lovely analysis - I respectfully disagree on the details, but we're justifying capitalism itself here, so the enemy of my enemy is my friend. Any finally there's an economist graph I half-inched from Patterico.

This tells us non-capitalist modes of production (sharing, theft, gift, and bureaucracy) can't produce affluence.

Do read the links in the order in which they appear please. Finding the right comments in the third link might be quite interesting. They are all by a user called BestTrousers and start with "RI" meaning R1.

The main argument used by HealthcareEconomist3 is to give a survey of several works, while BestTrousers goes for comparative advantage.

Hopefully you good folks can indulge me by forgiving this post. It is an unfinished mess because I wanted it out there as the anchor for a hyperlink from a Reddit thread.At the momebt everything below is a jumble of notes, but I will be reworking it bit by bit starting today.Hopefully this post will be sorted out and typed in full before the end of April 2017.

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Historical materialism is the idea that history progresses in stages - slavery, then feudalism, then capitalism, then socialism, then communism - driven by changes in the technologies or techniques of production, and that any human civilisation will exemplify this process.

This makes historical materialism an exercise in both historicism and materialism.

Historicism is the idea that studying the past can reveal history's in-built course or narrative, and so show you the future.

Materialism is the idea that ideas ( and institutions) ultimately* don't matter in determining our destinies, and that therefore only material…

The idea that labor exploits capital is equally as plausible, sans assumptions*, as the idea that capital exploits labor. This is only intended as a response to the formal concept, descriptive or normative, of exploitation in Marx's schema from Capital Volume I.

* Assumptions include the power relation whereby capital is just assumed to be above labor hierarchically.

~ ~ Capital exploits labor because...
... Capital earns income from production done by labor that capital didn't perform
& ~ Labor exploits Capital because...
... Labor earns income from capital that labor didn't buy~
Basically in good old formal logic fashion both of those cases above, being factual descriptions, are true at once or are false at once.